What is the difference between liquidation, closing down, and declaring bankruptcy?
Jan Meriss Alfonso Assistant at Ascent Law LLC The difference between liquidation, closing down, and declaring bankruptcy Liquidation, closing down, and declaring bankruptcy is all business concepts that inspire dread. But there is a difference among them—a difference that could mean the difference between hitting your target and missing it by miles. Example The first thing to know is that liquidation, closing down, and declaring bankruptcy are not the same things. Liquidation is what happens when a company ceases its operations and sells off whatever assets it has left in order to pay off creditors. A good example of this would be Circuit City, which went into liquidation in 2009 after failing to compete with big-box stores like Best Buy. Liquidation Liquidation is a very different animal from going out of business or declaring bankruptcy. When a business declares bankruptcy, it's not necessarily over—in fact, it may still have a chance if it can get some breathing room in order t...